Loophole Inserted in Climate Accord Augurs U.S.-China Clash

Drought in China has affected 6.5 million hectares of farmland, the Office of State Flood Control and Drought Relief Headquarters said on its website on May 20. Photographer: Keith Bedford/Bloomberg

Dec. 15 (Bloomberg) -- The deal struck by United Nations
envoys this week to fight climate change gives the biggest
polluters three options for a wider agreement by 2015, setting
the stage for renewed discord between rich and poor countries.

Negotiators from more than 190 nations agreed Dec. 11 to
draft a “protocol, legal instrument or an agreed outcome with
legal force” to take effect by 2020. While the European Union
says that calls for a treaty to limit fossil-fuel emissions in
all countries, two of the world’s three biggest air polluters,
China and India, signaled they expect to be assigned looser
limits in the final accord. UN carbon offsets, which rose today,
are headed for a record 25 percent weekly decline.

“The phrase ‘agreed outcome with legal force’ is new,”
Lou Leonard, a lawyer and director of WWF’s climate change
program in Washington, said in an interview. “They just made it
up. We don’t know what it means.”

With a dose of ambiguity, envoys now embark on four years
of talks on how to get all nations to curb emissions, aiming to
eventually regulate multinational polluters from U.S. Steel
Corp. to China Petroleum & Chemical Corp. Negotiations failed in
Copenhagen in 2009 after the U.S., China, India and the EU got
bogged down in divisions over a new treaty’s legal form.

EU Climate Commissioner Connie Hedegaard said that adding
the alternate wording of “legal outcome,” as favored by India,
would have given some countries a potential loophole to escape
obligations under a new agreement. “We need the opposite,” she
said on Dec. 11. “We need clarity. We need to commit.”

Carbon Permit Drop

UN Certified Emission Reduction credits, used by factories
and power plants under the EU’s carbon-trading system, rose for
the first day this week. The benchmark December 2011 contract,
which climbed 2.8 percent to 3.98 euros, is headed for a 25
percent weekly loss, the biggest since trading started in 2008.

The language in the deal stems from a last-minute
compromise after the two-week-long UN talks dragged on two days
past their scheduled close, to about 5:30 a.m. on Dec. 11. The
envoys from the U.S., India, China, the EU and Brazil huddled
out in the open on the plenary floor at about 2:40 a.m. until
they came up with legal phrases acceptable to all.

Indian Environment Minister Jayanthi Natarajan had earlier
fought to add “legal outcome” as an alternative to a possible
new “protocol” or “legal instrument” to cut global
greenhouse gases. The EU, which arrived in Durban pushing for a
new legally binding climate treaty involving all nations by
2015, rejected India’s language as too weak.

Historic Concept

The phrases “protocol” and “legal instrument” were
accepted by the EU because those concepts were the basis of
negotiating the 1997 Kyoto Protocol. That’s a legally binding
addition to the existing climate treaty that is now viewed as
outdated by many industrialized nations because it only orders
cuts from them, and not from fast-expanding economies such as
China and India.

The U.S. never accepted Kyoto because of this omission.

India’s Natarajan accused rich nations of trying to set
conditions that would rob poorer economies of their right to
develop along the same lines as industrialized countries in
prior centuries.

“We aren’t talking about lifestyle sustainability that
many of the children of more fortunate countries than ours have,
we are talking about livelihood sustainability,” Natarajan said
in a speech at the Dec. 11 meeting in Durban, winning thunderous
applause. “How do you a give a blank check and give a legally
binding agreement to sign away the rights of 1.2 billion people
and many other people in the developing world? Is that equity?”

Chinese Stance

Chinese envoy Xie Zhenhua followed her speech by saying his
country supports India’s position. He painted industrialized
nations as hypocrites for making demands on poor countries while
failing to meet their own pledges to reduce emissions.

“We’ve been talking about this for 20 years and it’s still
not being done,” Xie said. “We want to see your real
actions.”

China earlier spoke in Durban about taking on mandatory
targets only after 2020 and only if certain conditions are met.
Like India, it has been more willing to have voluntary measures.

India, China and the EU later agreed to replace “legal
outcome” with “agreed outcome with legal force.” The U.S.,
which won’t support a new treaty unless China and India are held
as accountable for their actions as industrialized countries,
helped come up with the language aimed at mollifying both sides.

‘Legal Outcome’

“‘Legal outcome’ is something India wanted a lot,” the
lead U.S. climate envoy Todd Stern told reporters around 6 a.m.
after the meeting in Durban concluded. “It’s just a little
vaguer, a little less certain what that might be. There’s more
ambiguity.”

The U.S. and EU and others wanted something with a “little
more legal certainty to it,” he said. “The phrase ‘an agreed
outcome with legal force’ just sounded a little meatier than a
‘legal outcome,’ nothing more scientific than that,” according
to Stern.

The EU’s Hedegaard called the UN agreement for new
negotiations a “major step forward.”

“Everyone must do something, some more than others but
whatever we agree to we must be equally accountable for it,”
she said in the Dec. 11 interview.

Stern said that while there are “technical variations on
the theme,” he believes all nations understand “we’re talking
about a legal agreement of some sort or another.”

India and China may view the matter differently, according
to Sunita Narain of the New Delhi-based Center for Science and
Environment.

Greater Legal Status

“My understanding is that the language gives India and
China some maneuvering room,” Narain, director general of the
lobbying group, said in an interview.

Spokesmen for India’s Natarajan didn’t respond to a request
for comment.

Alden Meyer, who has been following global climate-treaty
negotiations for more than two decades for the Union of
Concerned Scientists in Washington, said his understanding from
lawyers is that the meaning of the legal language in the Durban
agreement “depends on the circumstances.”

Since the more vague language of “agreed outcome with
legal force” is alongside the stronger terms “protocol” or
“legal instrument,” the former may be viewed as an agreement
with “greater legal status in terms of treaty interpretations
than if it were listed by itself,” Meyer said in an interview.

WWF’s Leonard said the opposite may be true in that a court
may decide the three different terms were used to indicate three
different potential levels of legal status to a new agreement.

Meyer added that any legally binding treaty, as seen with
Kyoto, is no guarantee that countries will adhere to its
requirements to cut emissions. “It won’t bind a country that
wants to be a scofflaw,” he said. “The only real compliance
mechanism is public opinion and fear of voters. That’s the
test.”